Excerpt:.....condemned unheard. if the mind of the petitioner was working on the threat of criminal action and the mind of the authority was engaged on the imposition of a penalty as it is now claimed then the notice exhibit 4 did not serve the purpose because it failed to inform what it intended to convey......learned additional government advocate on the ground that regardless of the section quoted in the notice exhibit 4, the petitioner had had ample opportunity of meeting the department's case not only at one stage but at several stages.12. the crucial words in section 10a, which we have extracted already, touching the argument in question are 'after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one-and-a-half times the tax which would have been levied under this act in respect of the sale to him of the goods if the offence had not been committed'. the expression 'reasonable opportunity of being heard' is of frequent occurrence in the field of law and has for its foundation the first principle of natural.....

Judgment:

B.P. Beri, C.J.

1. M/s. Oriental Engineering Company, Jaipur, has made two applications, one under Article 226 of the Constitution of India and the other under Section 9(3) of the Central Sales Tax Act, 1956, read with Section 15(2) of the Rajasthan Sales Tax Act, 1954, against the order of the Board of Revenue, Rajasthan, dated 24th May, 1967, and they can be conveniently disposed of together.

2. The petitioner is a registered firm under the Indian Partnership Act, 1932, and has been carrying on the business of selling diesel engines, generators, electric motors, pumps, bearings, etc., at Jaipur. It is registered as a dealer both under the Rajasthan Sales Tax Act and the Central Sales Tax Act. On 12th July, 1957, the petitioner applied to be registered as a dealer under the Central Sales Tax Act and a certificate was issued to it in respect of agricultural machinery parts for resale only. On 6th August, 1962, Inspector Baijal noticed that the certificate under the Central Sales Tax Act related only to agricultural machinery parts but the petitioner was taking benefits thereunder in regard to other machinery and goods. The petitioner, therefore, asked for an amendment of the certificate and the same was granted to it on 22nd August, 1962. On 7th August, 1962, however, a notice was issued to the petitioner, which is exhibit 4, under Section 10(b) of the Central Sales Tax Act in respect of the years 1959-60, 1960-61 and 1961-62 to the effect that the petitioner was importing goods on C forms at concessional rate of 1 per cent which were not mentioned in its registration certificate under the Central Sales Tax Act and thus it committed an offence under Section 10(b) of the said Act. The petitioner was required to appear with account books on 17th August, 1962, to show cause why legal action may not be taken against it. An answer was filed on 22nd September, 1962, which said that the petitioner bona fide believed during the years in question that it was entitled to import other goods, which it did, and the sales tax authorities without question permitted it to do so. The petitioner also added that there was no mala fide and still if the department prosecutes it, then it will defend itself in a competent court of law. The assessing authority, however, held that the petitioner's plea was untenable because it had in possession the registration certificate and yet it could never detect the mistake till it was pointed out by Shri Baijal, A.S.T.O., and after calculating the figure imposed a penalty under Section 10A of the Central Sales Tax Act against the petitioner in the sum of Rs. 4,000. The petitioner appealed, but the Deputy Commissioner, Excise and Taxation (Appeals), confirmed the order of the Sales Tax Officer, B Circle, Jaipur. The petitioner as well as the State preferred revision applications before the Board of Revenue, which by its order of 17th January, 1967 (exhibit 9), dismissed the petitioner's revision application and enhanced the penalty from Rs. 4,000 to Rs. 10,000. It is this order of the Board of Revenue which is challenged before us in the petition under Article 226 of the Constitution of India. An application under Section 9 of the Central Sales Tax Act has also been made.

3. The first submission of Mr. S.M. Mehta, appearing for the petitioner, is that if a registered dealer falsely represented when purchasing any class of goods that goods of such class were covered by the certificate of registration, then two courses were available to the sales tax authorities, namely, one of prosecution and the other of imposing a penalty in lieu of prosecution under Section 10A of the Central Sales Tax Act. There being no guiding line as to in what cases a dealer would be prosecuted and in what cases a penalty would be imposed in lieu of the prosecution under Section 10A of the Central Sales Tax Act, it amounted to a denial of equality before law and was hit by Article 14 of the Constitution of India. He placed reliance on Bahadur Singh v. Jaswant Raj Mehta I.L.R. (1952)2 Raj. 511, State of West Bengal v. Anwar Ali Sarkar A.I.R 1952 S.C. 75, Northern India. Caterers (Private) Ltd. v. State of Punjab A.I.R. 1967 S.C. 1581 and Galbaji v.C.T.0., Sirohi 1971 Tax. L.R. 29. This contention of the learned counsel for the petitioner is met by Mr. Shrimal, learned Additional Government Advocate, on the ground that the alternatives of prosecution or imposition of penalty are regular pattern of taxation laws and these two provisons are distinct and serve two independent purposes. Prosecutions are ordered with a view to vindicate justice against a violation contrary to the public interest, while penalties are imposed with a view to augment the revenues from the coffers whereof the tax had leaked. Thus these two provisions of Sections 10 and 10A are not violative of Article 14 of the Constitution and he placed reliance on Maddula Appa Rao v. Income-tax Officer, Eluru [1959] 36 I.T.R. 140 and S. Partap Singh v. State of Punjab A.T.R. 1964 S.C. 72. His Second submission was that an action under Section 10A was an indulgent treatment of a dealer which saved him from further prosecution in view of the proviso to Section 10A(1), but the reverse was not correct. A person who was prosecuted under Section 10 could also be penalised under Section 10A. The two sections are thus not mutually exclusive. He distinguished the case of Northern India Caterers on the ground that the special provision for the eviction of occupants of Government premises was a departure from the common law and there was no vindication of public justice. He also invited our attention to Hari Singh v. Military Estate Officer, Delhi Circle, Delhi Cantt. A.I.R. 1972 S.C. 2205 and Sivagaminatha Moopanar and Sons v. Income-tax Officer, II Circle, Madurai [1956] 28 I.T.R. 601.

4. In order to appreciate the rival contentions it will be profitable to extract the relevant portions of the law which are assailed before us. Section 10(b) of the Central Sales Tax Act, 1956, reads:

Section 10. Penalties. -- If any person....

(b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration; or....

he shall be punishable with simple imprisonment which may extend to six months, or with fine, or with both; and when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues.

5. Section 10A(1) reads:

Section 10A. Imposition of penalty in lieu of prosecution. -- (1) If any person purchasing goods is guilty of an offence under Clause (b) or Clause (c) or Clause (d) of Section 10, the authority who granted to him or, as the case may be, is competent to grant to him a certificate of registration under this Act may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one-and-a-half times the tax which would have been levied under this Act in respect of the sale to him of the goods if the offence had not been committed:

Provided that no prosecution for an offence under Section 10 shall be instituted in respect of the same facts on which a penalty has been imposed under this Section....

7. The first principle relating to discrimination arising from procedural differences came to be considered by their Lordships of the Supreme Court in Anwar Ali's case A.I.R. 1952 S.C. 75. The West Bengal Special Courts Ordinance, 1949, was under challenge. It provided a speedier trial of certain offences and empowered the State Government by notification in the official Gazette to constitute special courts. Section 5 provided that a special court should try such offences or classes of offences or cases or classes of cases, as the State Government may by general or special order in writing, direct. Sections 6 to 15 prescribed the special procedure which the court had to follow in the trial of the cases referred to it. Fazl Ali, J., inter alia, observed: 'The Act itself lays down a procedure which is less advantageous to the accused than the ordinary procedure, and this fact must in all cases be the root-cause of the discrimination which may result by the application of the Act.

8. In Northern India Caterers' case A.T.R. 1967 S.C. 1581, the Punjab Act 31 of 1959 provided an additional remedy of eviction to the Government, a remedy which it thought was speedier than the one by way of a suit under the ordinary law. Their Lordships observed that Section 5 of Act 31 of 1959 did not lay down any guiding principle or policy under which the Collector had to decide in which cases he had to follow the one or the other procedure and, therefore, the choice was left to his arbitrary will. Consequently, Section 5 by conferring such an unguided and absolute discretion manifestly violated the right of equality guaranteed by Article 14. Mr. Mehta laid great emphasis on this observation and urged that the sales tax authorities were left with unbridled option to prosecute some dealers and to impose penalties on others and, therefore, Section 10A was violative of Article 14 of the Constitution.

9. A reference to Section 11 of the Central Sales Tax Act would show that no court shall take cognizance of any offence punishable under the Act, including the one under Section 10(b), except with the previous sanction of the Government within the local limits of whose jurisdiction the offence had been committed or of such officer of that Government as it may, by general or special order, specify in this behalf. Section 10A, on the other hand, empowers the imposition of penalty in lieu of prosecution by the authority who granted to the dealer the registration or who was competent to grant him such a certificate. Thus it is clear that the discretion to prosecute resided in an authority different from the one who could impose a penalty. To this extent it cannot be said that it was the same officer who would decide by the toss of a coin or the whim of his mood whether to prosecute or to impose a penalty. Another distinction that could be drawn is that once the penalty was imposed having regard to the proviso to Section 10A(1) no prosecution could be launched. To this limited extent the one course of action closed the doors against the other. We accept the argument advanced by Mr. Shrimal on the authority of Maddula Appa Rao's case [1959] 36 I.T.R. 140 that the object of Section 10 was vindication of public justice as against the object of Section 10A to make tax evasion and concealment as unprofitable and unremunerative. The learned Judges of the Andhra Pradesh High Court in Maddula Appa Rao's case [1959] 36 I.T.R. 140 were considering the provisions of Sections 28, 51 and 52 of the Indian Income-tax Act, 1922. Section 28 of the said Act provided for a penalty for concealment of income or improper distribution of profits, while Section 51 related to the failure to make payments or deliver returns or statements or allow inspection under the title of 'offences and penalties'. Section 52 related to prosecutions arising on account of false statement in declaration. The learned Judges observed:

The question for consideration is, do these provisions of law enable an Income-tax Officer to discriminate as amongst different assessees? We are not much impressed with the argument of the learned counsel for the petitioner on this point. We do not think that the doctrine of 'equal protection of laws' is in any way infringed by the material provisions of the Income-tax Act. They do not leave any unfettered discretion to deal with persons similarly situated in a similar fashion. It is to be borne in mind that these two sets of provisions are designed to achieve two distinct objects.

The aim and object of Section 28 is to make tax evasion and concealment thereof unprofitable and unremunerative, while that of Sections 51 and 52 is the vindication of public justice. While the one aims at punishing the culprit and vindicating public justice, the object of the other is to protect the revenue and to reimburse the Government for the expenditure involved in the investigation of the loss resulting from the fraud of the assessees. Their fields of operation also seem to be different except with regard to one or two matters. It is only with regard to Sub-sections (2) and (4) of Section 28 that there is some overlapping. Therefore, these provisions are not mutually exclusive. A person who had been subject to penalty under Section 28 cannot escape prosecution under Section 51. It is true that Section 28(4) says that a person on whom penalty has been imposed will not be prosecuted. But this is a statutory concession and does not really bear on the question whether one excludes the other. These two kinds of sanctions appear to be a feature of several of the fiscal enactments. The idea in enacting these provisions seems to be to deter taxpayers from resorting to fraudulent practices and for the realisation of taxes as expeditiously as possible.

10. We are in respectful agreement with this approach to the question. The provisions of law, which we are called upon to interpret, are substantially the same. Sections 10 and 10A do not suffer from the vice of placing power in one officer to exercise it erratically or arbitrarily. They are designed to achieve two distinct objects and, therefore, it cannot be said that they are invalid being violative of Article 14 of the Constitution of India.

11. The next argument of the learned counsel for the petitioner is that he was denied the reasonable opportunity as envisaged by Section 10A of the Central Sales Tax Act. Exhibit 4, the notice issued to the petitioner was under Section 10(b), carried with it a threat of prosecution which was appropriately answered by exhibit 5 and no notice under Section 10A was given. This argument of the learned counsel for the petitioner is sought to be met by the learned Additional Government Advocate on the ground that regardless of the Section quoted in the notice exhibit 4, the petitioner had had ample opportunity of meeting the department's case not only at one stage but at several stages.

12. The crucial words in Section 10A, which we have extracted already, touching the argument in question are 'after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one-and-a-half times the tax which would have been levied under this Act in respect of the sale to him of the goods if the offence had not been committed'. The expression 'reasonable opportunity of being heard' is of frequent occurrence in the field of law and has for its foundation the first principle of natural justice, namely, let no man be condemned unheard. What opportunity is reasonable in a given set of circumstances is largely influenced by what kind of notice was given before action. In the case before us, the notice exhibit 4 dated 7th August, 1962, contained an unequivocal threat to the dealer that he will be prosecuted for the offence as defined under Section 10(b) of the Central Sales Tax Act. It is a futile attempt on the part of the learned Additional Government Advocate to seek resort under the words 'legal action', as employed in the notice exhibit 4, as notice for an action under Section 10A because the notice itself contains Section 10(b) in its title, the threat of prosecution in paragraph 1 and the words 'legal action' are contained in paragraph 2. The legal action, therefore, as employed in paragraph 2 will take its complexion from what precedes in it, namely, prosecution under Section 10(b). It is, therefore, idle to contend that this notice was adequate notice for the purposes of Section 10A. For, if such a notice was given to the dealer it would have been informed that it was proposed to impose a penalty to the extent authorised by the section for the reasons that the dealer acted contrary to the terms of the registration certificate in that behalf. The amount of tax leviable and the articles which were included within the four comers of the certificate would have been the questions that would have attracted the attention of the petitioner and he would have made an appropriate answer. If the mind of the petitioner was working on the threat of criminal action and the mind of the authority was engaged on the imposition of a penalty as it is now claimed then the notice exhibit 4 did not serve the purpose because it failed to inform what it intended to convey. The answer to exhibit 4 gives an unequivocal impression that the dealer understood exhibit 4 to mean a notice for prosecution. And the dealer was plainly right in reading the notice thus. There being no trace of the department's desire to impose a penalty in the notice, exhibit 4, it is no opportunity, much less reasonable, under Section 10A. Consequently, the entire proceedings are vitiated for want of proper notice as contemplated by Section 10A of the Central Sales Tax Act, and to add to the suffering of the dealer when the matter went up to the Board of Revenue the dealer's fine was increased from Rs. 4,000 to Rs. 10,000. The petitioner had at no point of time an opportunity to put forward exact figures of purchase and contest the questions relating to the tax liability. In this view of the matter the notice exhibit 4 was no notice under Section 10A. The dealer was not given any opportunity as required by Section 10A and the foundational proceedings before the Sales Tax Officer suffer from this patent infirmity.

13. Learned counsel for the petitioner raised other arguments relating to the absence of mens rea, the miscalculation of the penalty and the Revenue Board's order in dismissing the special appeal as not maintainable and the jurisdiction of the Board of Revenue to hear the revision. They need not detain us in view of the conclusion we have already reached.

14. The result is that this writ petition is allowed, the order of the assessing authority dated 19th November, 1962, exhibit 7, the order of the Deputy Commissioner, Excise and Taxation, dated 5th February, 1963, exhibit 8, and the order of the Board of Revenue dated 17th January, 1967, exhibit 9, are quashed. The department will be at liberty to proceed against the petitioner under Section 10A in accordance with law.

15. In view of our conclusion the Sales Tax Reference No. 30 of 1967 is not pressed and is dismissed.